Relativity Removes Pair From Board as Ryan Kavanaugh Fights to Keep Control (Exclusive)

Colbeck Capital partners Jason Colodne and Jason Beckman — who Relativity fingered as the source of a recent negative story about Kavanaugh — have resigned from their positions on the studio's board.

Relativity Media CEO Ryan Kavanaugh is fighting back at a report that his 11-year grip on the mini-studio is in danger. Kavanaugh has mustered the support of Relativity’s board of directors to remove Colbeck Capital partners Jason Colodne and Jason Beckman — who Relativity fingered as the source of a recent negative story about Kavanaugh in the New York Post — from the board. A source tells The Hollywood Reporter that the pair resigned under pressure Wednesday morning.

The move comes on the heels of the May 22 report that said Kavanaugh, who founded Relativity in 2004, is scrambling to raise $200 million to pay off debt that is due in less than a week. The story added that if the mogul can’t secure the funds before May 31, several debt holders — primarily Colbeck — will seize control of the studio, possibly ousting him as its leader.

Relativity insiders immediately slammed the story as false, insisting that the debt has been serviced and that two banks have been added as backers in the run-up to an IPO that is eyed for the second or third quarter of 2016. Relativity released a strongly-worded statement to THR on Wednesday: "Ryan Kavanaugh remains fully in control of Relativity. Under Ryan’s leadership, Relativity has successfully recapitalized its balance sheet by refinancing its existing debt and raising additional capital in the form of debt and equity."

The statement continued: "At the board’s request, Colbeck Capital has resigned from the Relativity board of directors, and some with an axe to grind are clearly mounting a desperate attempt to spread false rumors about the company."

Kavanaugh declined comment on the boardmembers' removal.

Colodne, who once resigned from his Wall Street job at Patriarch Partners after appearing on an episode of Real Housewives of New York, and Beckman joined the Relativity board in 2012 after Colbeck played a key role in a $350 million debt financing deal with Relativity that was used to fund films and for business expansion. New York-based MESA Global also advised on the capital raised in that deal.

But since striking that deal three years ago, Relativity has struggled at the box office, with its biggest hit coming via the Nicholas Sparks-based Safe Haven ($71 million domestically). Of the four films it released in 2015, its top domestic grosser has been The Woman in Black 2: Angel of Death, with $27 million, while the horror film The Lazarus Effect pulled in $26 million domestically. Before I Wake, which was scheduled to open May 8, was moved to September. However, sources say both Woman in Black 2 and Lazarus Effect are profitable as is the Kevin Costner starrer Black or White, which Relativity picked up in September at the Toronto Film Festival and released in January.

Relativity is said to have some of the most lucrative overseas output deals and typically has covered 90 percent of its investment before releasing a film in the U.S. The company’s business model is based on the assumption that no film will earn more than $100 million worldwide.

The studio, which is set to release an additional seven films before year’s end including Sundance breakout The Bronze, says that 85 percent of its films are profitable. And though films remain Relativity’s main profit driver, the company also makes money from its highly profitable TV and sports and brand representation divisions (CBS recently picked up to series Limitless and will give it a plum spot in its primetime lineup after the network’s highest-rated series, NCIS). A source says those divisions are projected to account for nearly 40 percent of Relativity’s profits by 2016 and half by 2017.

While speculation about the studio swirls in Hollywood, Ron Burkle, who is a major investor in both Relativity and Colbeck and a Relativity board member, privately remains a supporter of Kavanaugh, according to sources, though he didn't respond to a request to comment for this story. In 2012, Burkle acquired most of the equity interest in Relativity that had been held by New York hedge fund Elliott Management. Kavanaugh continues to maintain majority control of the company.

In October, Dune Capital's Steve Mnuchin teamed with Kavanaugh and a group of investors to buy a significant portion of debt and equity owned by Elliott. At the time, Mnuchin joined Relativity's board as a non-executive co-chairman, assisting the company on strategic issues and its capital structure in the run-up to a possible IPO.

Last month, Relativity struck a $250 million deal with San Francisco-based VII Peaks Capital. But the Post story alleged that access to that capital is being blocked by Anchorage and Colbeck over the terms of that deal, a point that a Relativity insider denies.